Read the Richardâs Furniture Company case that starts on page 58of the textbook (problem 11) and then describe how internal controlcould be strengthened at Richardâs.
Richards Furniture company is a 15-store chain, concentrated inthe southwest, that sells living room and bedroom furniture. Eachstore has a full-time manager and an assistant manager, who arepaid on a salary basis. The cashiers and sales personnel typicallywork part-time and are paid an hourly wage plus a commission basedon sales volume. The company uses cash registers with four-partsales invoices to record each transaction the invoices are usedregardless of the payment type. On the sales floor the slaespersonmanually records his or her employee number and the transactiontotals the invoice and calculates any approriate discount and thesales tax retaining one copy in the sale book. The cashier reviewsthe invoice and inputs the slae into the cash register. The cashreigister automatically assigns a consecutive number to eachtransaction. The cashier is also reponsible for obtaining creditautorization approval on credit card sales and approving slaes paidby check. The cashier gives one copy of the invoices to thecustomer and retains the second copy as the store copy. Returns arehandled in exactly the reverse manner with the cashier issuing areturn slip when necessary. At the end of each day the cashiersequentially order the slaes invoices and provides cash registertotals for cash CC and check sales as well as cash and cc returns.These totals are reconciled by assistant manger to the cashregister tapes the total of the consecutively number salesinvoices, and the return slips. The assistant manager prepare adaily reconciled report for the store manager's to review. Cashsales check sales and CC salesare reviewed by the manager who thenprepares the daily bank deposit. the manager physically depositsthese at the bank and files a validation deposit slip. at the endof the month the manger performs the bank reconcilation. The cashregister tapes sales invoices return slips and reconciled reportsare then fowarded daily to the centeral data entry depaortment atcorporate headquarters for processing. The data entry depaortmentreturns a weekly sales and commision activity report to themanagers to review.
Read the Richardâs Furniture Company case that starts on page 58of the textbook (problem 11) and then describe how internal controlcould be strengthened at Richardâs.
Richards Furniture company is a 15-store chain, concentrated inthe southwest, that sells living room and bedroom furniture. Eachstore has a full-time manager and an assistant manager, who arepaid on a salary basis. The cashiers and sales personnel typicallywork part-time and are paid an hourly wage plus a commission basedon sales volume. The company uses cash registers with four-partsales invoices to record each transaction the invoices are usedregardless of the payment type. On the sales floor the slaespersonmanually records his or her employee number and the transactiontotals the invoice and calculates any approriate discount and thesales tax retaining one copy in the sale book. The cashier reviewsthe invoice and inputs the slae into the cash register. The cashreigister automatically assigns a consecutive number to eachtransaction. The cashier is also reponsible for obtaining creditautorization approval on credit card sales and approving slaes paidby check. The cashier gives one copy of the invoices to thecustomer and retains the second copy as the store copy. Returns arehandled in exactly the reverse manner with the cashier issuing areturn slip when necessary. At the end of each day the cashiersequentially order the slaes invoices and provides cash registertotals for cash CC and check sales as well as cash and cc returns.These totals are reconciled by assistant manger to the cashregister tapes the total of the consecutively number salesinvoices, and the return slips. The assistant manager prepare adaily reconciled report for the store manager's to review. Cashsales check sales and CC salesare reviewed by the manager who thenprepares the daily bank deposit. the manager physically depositsthese at the bank and files a validation deposit slip. at the endof the month the manger performs the bank reconcilation. The cashregister tapes sales invoices return slips and reconciled reportsare then fowarded daily to the centeral data entry depaortment atcorporate headquarters for processing. The data entry depaortmentreturns a weekly sales and commision activity report to themanagers to review.
